Heating Oil Futures

The price of oil advanced dramatically beginning March 26, 2008 - from $ 2.7980 to $ 3.3028 per gallon on the wholesale market in New York. Of course, shipping costs add to the total cost of the product when delivered to the customer's tank. Weather Spring is almost here now, but if prices remain at their current levels if the next winter arrives, the owners will be able both to feed their families and keep them warm? With food prices rising so quickly, at the same time as the price of heating oil for his furnace and gasoline for his car or truck, will be head of the family so short that one or the other should give way? These are issues of concern.

Was there any idea of the recent rise in oil prices, the owner could have done anything to offset it, and can do something to mitigate the effect of price fluctuations in the future? The answer is, yes, in all respects. The key lies in the examination of paintings in fuel oil using Japanese candlestick analysis. Specifically, the bar March 25 Daily price of heating oil has been a "Hammer" trend that arises after a six-day decline in prices. The Hammer is a bullish signal classic warned against a possible reversal of trend upward, subject to confirmation by a higher closing price the next day. That is exactly what happened: the next trading day, prices advanced smartly and closed significantly higher, reaching a schedule of three days which was a variation of a Morning Star "model, which is also bullish. After a brief hiccup few days later, prices have resumed their strong upward trend over most of April and closed at $ 3.3028 on April 25.

If the owner (or investor for that matter) has recognized the "Hammer" and "Morning Star" change models, he could have acted on this information, or he could choose to wait several days for confirmation. Anyway, it would have been able to take advantage of higher prices that followed.

Here the best case: Did he bought a contract May heating oil to low Mars 25 (2.7980 $) and it sold April 25 closing price that day ($ 3.3028 ), it would have made a profit of $ 21,201.60! This number is obtained in this way: in the market for heating oil futures, each contract controls 42.000 gallons, and each movement (either up or down) of one cent per gallon for the price of Oil is worth $ 420. The difference between the theoretical entry price $ 2.7980 per gallon and the selling price of $ 3.3028 theoretical gallon was $ 0.5048, or 50.48 cents. 50.48 multiplied by $ 420 equals $ 21,201.60.

Would investors have been "caught" between the price and the bass? Probably not. He might have waited until the trading on the day following the "Hammer" was partially or nearly complete, to see if there was confirmation of the "Hammer" bullish signal.

As borough history, it should be noted that, to play at this table, the investor must deposit funds, either through "margin" or prepay for the cost of an option . Although this example would have required an investment that was probably beyond the capacity or risk tolerance level of most owners, an investment club comprised of several people could have shared the opportunity and risk and could have benefited proportionately.

The point is to make is that - funds permitting - we did not sit idly in the supine passivity while prices of oil, gasoline and other products are given to us. Instead, devices exist after which the result may be due to both advances and declines in market price if the investor is well informed, alert enough, and known.